PV tax credit ‘successful’ incentive — survey

More than 80% of homeowners cite subsidies in switch to solar

April 14, 2013

The state tax credit is a major incentive to install solar photovoltaic systems, and eliminating or reducing them would drive Hawaii homeowners away from using the sun to power their homes. At least that is what a recent survey by the Blue Planet Foundation suggests.

The survey, published this month, found that more than 80 percent of Hawaii homeowners who have installed a PV system cite the state tax credit as one of the top two reasons they made the switch to solar. The number one reason was, not surprisingly, to lower electric bills.

In Maui County, approximately 4,000 homeowners have installed solar PV systems, according to county officials. Only three out of 10 existing PV owners said they still would have switched to solar if there had been no tax credits. As for those who are considering the installation of a PV system, only 28 percent say they still would install solar systems if tax credits were "reduced considerably or eliminated."

These findings come at a crucial time in the legislative session, as lawmakers debate whether to pass a bill that would reduce the state's renewable energy tax credits over four years. House Bill 497 proposes that solar tax credits be gradually reduced from 35 percent of a system's installed cost to 15 percent by 2017. Tax credits for solar hot water heating systems and wind energy systems would remain the same under the bill.

"We want to equip lawmakers with accurate, real-world data so they fully understand the implications of their decisions regarding the solar tax credit," said Jeff Mikulina, chief executive officer of the Blue Planet Foundation, a group dedicated to ending Hawaii's dependence on imported oil by switching to local, renewable sources of energy.

The study is the first of its kind to examine exactly how the state tax credit affects Hawaii residents' decision-making to go solar, he added.

"We know that the credit has been highly successful in helping free residents from high fossil fuel energy costs, so we want to proceed cautiously with any changes," Mikulina said.

The tax credit started in 1976 as a measure to promote the purchase of solar energy systems and reduce the state's dependence on fossil fuels. But now, as solar energy has become more popular, the state is having more difficulty in affording the tax subsidies.

"Why reduce the credit? Mainly because the cost is rising dramatically as more and more people add solar," said county Energy Commissioner Doug McLeod.

"If the state is trying to fund 35 percent (for every household), it will cost (the state) more every year. Lowering the percentage is the only way to flatten the cost impact," he said.

Also, McLeod noted that switching to solar is a lot more cost-effective now than it was nearly 40 years ago, so there is less need for such a large tax credit. The price of the solar panels has dropped dramatically. For example, a 250-watt panel that would have cost $800 two years ago now costs only $125, McLeod said.

Regardless of what the state does with its tax credit statute, the federal tax credit of 30 percent will continue through at least 2016.

The county and the University of Hawaii Maui College are sponsoring a "Solar Summit" to provide residents with information about photovoltaic power on Maui. The event is "tentatively scheduled" for 11:30 a.m. to 1 p.m. May 22 at the college.